Gold seemed to be on a bit of a rollercoaster ride last week, starting off at just over £1,100 on Monday and then then rising by 3.6%, hitting an 8-year high of £1,140 during Wednesday. It then saw a fall at the end of the week, landing at £1,118 over the weekend.
So, with all these ups and downs, in such a short period of time, where will it take us next?
Ups & Downs
As we know, gold prices react strongly to geopolitical concerns, and we have quite a few of those at present. The trigger for last week’s fall looks to have been the Friday release of figures in the US showing a better than expected rise in jobs, which lowered expectations for interest rate cuts from the Fed. This then saw the US dollar boosted to two-week highs.
Another possible contribution to the fall in the gold price could be news reports stating that India will be boosting its import duties on gold by 2.5%. This could have had an impact and put downward pressure on gold.
Thinner trading over the Fourth of July holiday may also have been a factor, as dramatic changes in market direction can often happen during the aftermath of a major holiday in the US.
Statistics regarding job creation tend to have only a short-term effect on gold, and despite those reported strong jobs numbers in the US, the Fed is still expected to cut interest rates, although maybe not as aggressively as what could originally have been. We should also see the price settle after last week’s Fourth of July holiday in the US.
Geopolitical tensions between the US and Iran continue, as the latter plan to boost their uranium above the cap set by a 2015 nuclear deal and were subsequently given a warning by President Trump to ‘be careful.’ The ongoing trade conflicts with the US and China and Mexico could also see gold prices continue to rise.
Planning for the Future
Gold is a like a ruler - it measures value. We can watch the price go up and down – however, the value of gold is not changing, it is the value of the Pound or the Dollar that is changing in value. Gold is constant, it keeps its intrinsic value and always has. For sure, the price of our favourite precious metal will deviate and change, occasionally dramatically in the short-term, but when we are in this to protect our wealth and our future over a much longer period than that, the long-term will be the final judge.
I think we can all agree that those are the principles behind keeping a little of what your worth in Gold and/or Silver in your hand, right?
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.